Income Beginner: Introduction to Deposit Accounts

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1.
All of the following are advantages of asset management accounts, except _______.
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Low minimum balances. Low minimum balances are not a feature of asset management accounts.
2.
Because deposit accounts pay relatively low yields, investors have little need of them.
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False. Deposit accounts can be useful tools for accumulating investment capital, sheltering funds during market downturns, and maintaining a supply of liquid cash.
3.
Which of the following is a reason an investor might open a deposit account?
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All of the above. Investors open deposit accounts for all of these reasons.
4.
High-balance deposit accounts typically charge penalties for early withdrawal.
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False. Your money is always available.
5.
The higher the interest/dividend rate paid, the higher the minimum balance a deposit account usually requires.
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True. The tradeoff for higher earnings rates is letting the financial institution hold more of your money.